ORRVILLE, Ohio, Aug. 23, 2016 /PRNewswire/ -- The J. M.
Smucker Company (NYSE: SJM) today announced results for the first
quarter ended July 31, 2016, of its
2017 fiscal year. All comparisons are to the first quarter of
the prior fiscal year, unless otherwise noted.
EXECUTIVE SUMMARY
- Net sales decreased 7 percent, reflecting the impact of the
divested U.S. canned milk business and price declines.
- Net income per diluted share increased 28 percent to
$1.46.
- Adjusted earnings per share was $1.86, an increase of 16 percent, reflecting
incremental synergy realization, a lower tax rate, and fewer shares
outstanding.
- Synergy realization was $32
million in the first quarter as the Company remains on track
to achieve $100 million of
incremental synergies in fiscal 2017.
- Cash provided by operating activities was $238.9 million in the first quarter, compared to
$307.0 million in the prior year.
- The Company maintained its full-year fiscal 2017 earnings
outlook, with adjusted earnings per share expected to range from
$7.60 to $7.75.
CHIEF EXECUTIVE OFFICER REMARKS
"We are pleased with the start to our fiscal year as we
delivered record first quarter earnings per share, which exceeded
our expectations," said Mark
Smucker, Chief Executive Officer. "Despite the impact
of deflation on the top line, we remain on track to achieve our
original expectations for full-year earnings per share. We
are strengthening a great portfolio of brands by investing in new
capabilities and on-trend platforms that are essential to long-term
sales growth. At the same time, we are focused on sustainable
cost reductions that are delivering significant bottom-line
benefits. For these reasons, we remain confident in achieving
our long-term objectives and delivering continued shareholder
value."
NON-GAAP MEASURES AND SEGMENT RESULTS
Beginning May 1, 2016, the Company
redefined certain non-GAAP measures and modified its segment profit
calculation to exclude amortization expense related to intangible
assets, including any related impairment charges. Prior year
results have been modified to conform to the new presentation.
Additional information is included in the Company's Form 8-K,
dated July 25, 2016.
FIRST QUARTER CONSOLIDATED RESULTS
|
|
Three Months Ended
July 31,
|
|
|
|
|
|
|
% Increase
|
|
|
2016
|
|
2015
|
|
(Decrease)
|
|
|
(Dollars and shares
in millions, except per share data)
|
|
|
|
|
|
|
|
Net
sales
|
$
1,815.8
|
|
$
1,952.0
|
|
(7%)
|
|
|
|
|
|
|
|
Operating
income
|
$
293.8
|
|
$
267.1
|
|
10%
|
Adjusted operating
income
|
364.0
|
|
356.1
|
|
2%
|
|
|
|
|
|
|
|
Net income per
common share – assuming dilution
|
$
1.46
|
|
$
1.14
|
|
28%
|
Adjusted earnings per
share
|
1.86
|
|
1.60
|
|
16%
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding – assuming dilution
|
116.5
|
|
119.6
|
|
(3%)
|
|
|
|
|
|
|
|
Results for the three
months ended July 31, 2015, include the Company's former U.S.
canned milk business, which was divested on December 31,
2015.
|
Net Sales
Net sales decreased $136.2
million, including $39.5
million attributed to the divested U.S. canned milk
business. Excluding the noncomparable divested business and
foreign currency exchange, net sales decreased $92.1 million, or 5 percent. This was
driven by a 4 percentage point impact of lower net price
realization, which was mostly attributed to coffee.
Unfavorable volume/mix, driven by the U.S. Retail Pet Foods
segment, also contributed to lower net sales.
Operating Income
Gross profit decreased $6.0
million, or 1 percent, reflecting lower net pricing and the
loss of U.S. canned milk profits. These factors were mostly
offset by a reduction in commodity costs, primarily attributed to
green coffee, and incremental synergy realization. Selling,
distribution, and administrative ("SD&A") expenses decreased
$31.6 million, or 8 percent,
primarily driven by synergy realization and reduced selling
expense. Operating income increased $26.7 million, or 10 percent, primarily
reflecting the lower SD&A expenses.
On a non-GAAP basis, adjusted gross profit decreased
$22.8 million, or 3 percent, with the
primary difference from GAAP results being the exclusion of a
$17.7 million favorable change in
unallocated derivative gains and losses. Adjusted operating
income increased $7.9 million, or 2
percent.
Other
Net interest expense decreased $2.9
million, due to reduced debt levels. Income taxes
decreased $3.0 million as the
increase in income before tax was offset by a lower effective tax
rate of 32.9 percent. This represented a decrease from 38.8
percent in the prior year, which reflected higher deferred state
tax expense and the impact of state tax law
changes.
Cash provided by operating activities was $238.9 million. This compared to
$307.0 million in the prior year,
which benefited from a non-recurring $49.6
million tax refund.
FULL-YEAR OUTLOOK
The Company updated its full-year fiscal 2017 guidance as
summarized below:
|
Current
|
Previous
|
Comparable net sales
increase (decrease) vs prior year
|
0% to (1%)
|
1%
|
Adjusted earnings per
share
|
$7.60 -
$7.75
|
$7.60 -
$7.75
|
Free cash
flow
|
$1.0
billion
|
$1.0
billion
|
Capital
expenditures
|
$240
million
|
$240
million
|
Effective tax
rate
|
33.5%
|
34.0%
|
|
|
|
|
|
|
Net sales are expected to decrease in the range of 2 percent to
3 percent from fiscal 2016, reflecting the U.S. canned milk
divestiture. Excluding the impact of the divestiture, net
sales are expected to range from flat to down 1 percent. The
change in sales guidance is based on a reduced net sales forecast
for U.S. Retail Pet Foods. The corresponding decrease in
profit is expected to be offset by input cost decreases for U.S.
Retail Consumer Foods and a lower effective tax rate compared to
the previous estimate. Adjusted earnings per share is
unchanged and expected to range from $7.60
to $7.75, based on 116.6 million shares outstanding.
Included in earnings guidance is $100
million of incremental synergies in fiscal 2017.
FIRST QUARTER SEGMENT RESULTS
Dollar amounts in the segment tables below are reported in
millions.
U.S. Retail
Coffee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY17 Q1
Results
|
|
$513.3
|
|
$173.8
|
|
33.9%
|
Increase (decrease)
vs prior year
|
(9%)
|
|
-
|
|
310bps
|
|
|
|
|
|
|
|
Segment net sales decreased $51.7
million, reflecting lower net price realization, which was
primarily attributed to the impact of two 6 percent list price
declines since the beginning of fiscal 2016. Favorable
volume/mix for the Folgers® and Café
Bustelo® brands was offset by declines for
Dunkin' Donuts® K-Cup® pods,
which were anticipated following the successful introduction of the
product line at the beginning of fiscal 2016. Segment profit
was comparable to the prior year primarily due to lower commodity
costs and favorable Folgers® volume/mix being
offset by lower net price realization and the reduced contribution
from Dunkin' Donuts® K-Cup®
pods.
U.S. Retail
Consumer Foods
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY17 Q1
Results
|
|
$537.0
|
|
$111.4
|
|
20.7%
|
Increase (decrease)
vs prior year
|
(8%)
|
|
(7%)
|
|
20bps
|
|
|
|
|
|
|
|
Segment net sales decreased $45.2
million, primarily reflecting the impact of $34.2 million of noncomparable net sales in the
prior year related to the divested U.S. canned milk business.
Excluding the impact of the divestiture, net sales decreased 2
percent. The decline reflected lower net price realization,
primarily attributable to the Crisco®,
Pillsbury®, and Jif® brands.
Volume/mix was comparable to the prior year as contributions
from the R.W. Knudsen Family® and Sahale
Snacks® brands were offset by a decrease for the
Smucker's® brand. Segment profit
decreased $8.0 million, primarily
reflecting the loss of U.S. canned milk profits.
U.S. Retail Pet
Foods
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY17 Q1
Results
|
|
$519.5
|
|
$122.2
|
|
23.5%
|
Increase (decrease)
vs prior year
|
(6%)
|
|
5%
|
|
230bps
|
|
|
|
|
|
|
|
Segment net sales decreased $30.4
million, primarily due to unfavorable volume/mix, which
impacted net sales by 5 percentage points. This was driven by
Kibbles 'n Bits® and Meow
Mix® mainstream pet food, and the Natural
Balance® brand, which benefited from initial
shipments in the prior year related to distribution gains. A
slight decline in net price realization also contributed to the
decrease in net sales. Segment profit increased $5.4 million as synergy realization, lower
commodity costs, and a decrease in marketing expense more than
offset the impact of unfavorable volume/mix.
International and
Foodservice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
Segment
|
|
Segment
|
|
|
Sales
|
|
Profit
|
|
Profit
Margin
|
FY17 Q1
Results
|
|
$246.0
|
|
$39.5
|
|
16.1%
|
Increase (decrease)
vs prior year
|
(3%)
|
|
9%
|
|
190bps
|
|
|
|
|
|
|
|
Segment net sales decreased $8.9 million, reflecting
noncomparable sales of $5.3 million
in the prior year related to the divested U.S. canned milk business
and an unfavorable $4.6 million impact of foreign
currency exchange. Favorable volume/mix, which contributed 2
percentage points of growth to net sales, was offset by a decrease
in net price realization. Segment profit increased $3.4
million, resulting from favorable volume/mix and the net benefit of
lower commodity costs and price, which more than offset the impact
of the divested business and foreign currency exchange.
Conference Call
The Company will conduct an earnings conference call and webcast
today, August 23, 2016, beginning at
8:30 a.m. Eastern time. To
access the webcast, please visit
jmsmucker.com/investor-relations.
The J. M. Smucker Company Forward-Looking Statements
This press release contains forward-looking statements, such as
projected net sales, operating results, earnings, and cash flows
that are subject to risks and uncertainties that could cause actual
results to differ materially from future results expressed or
implied by those forward-looking statements. The risks,
uncertainties, important factors, and assumptions listed and
discussed in this press release, which could cause actual results
to differ materially from those expressed, include: the ability to
achieve synergies and cost savings related to the Big Heart Pet
Brands acquisition in the amounts and within the time frames
currently anticipated and to effectively manage the related
integration costs; the ability to generate sufficient cash flow to
meet the Company's deleveraging objectives; volatility of
commodity, energy, and other input costs; risks associated with
derivative and purchasing strategies employed to manage commodity
pricing risks; the availability of reliable transportation on
acceptable terms; the ability to implement and realize the full
benefit of price changes, and the impact of the timing of the price
changes to profits and cash flow in a particular period; the
success and cost of marketing and sales programs and strategies
intended to promote growth in the businesses, including the
introduction of new products; general competitive activity in the
market, including competitors' pricing practices and promotional
spending levels; the impact of food security concerns involving
either the Company's or its competitors' products; the impact of
accidents, extreme weather, and natural disasters; the
concentration of certain of the Company's businesses with key
customers and suppliers, including single-source suppliers of
certain key raw materials and finished goods, and the ability to
manage and maintain key relationships; the timing and amount of
capital expenditures and share repurchases; impairments in the
carrying value of goodwill, other intangible assets, or other
long-lived assets or changes in useful lives of other intangible
assets; the impact of new or changes to existing governmental laws
and regulations and their application; the outcome of tax
examinations, changes in tax laws, and other tax matters; foreign
currency and interest rate fluctuations; and risks related to other
factors described under "Risk Factors" in other reports and
statements filed with the Securities and Exchange Commission,
including the Company's most recent Annual Report on Form 10-K. The
Company undertakes no obligation to update or revise these
forward-looking statements, which speak only as of the date made,
to reflect new events or circumstances.
About The J. M. Smucker Company
For nearly 120 years, The J. M. Smucker Company has been
committed to offering consumers quality products that bring
families together to share memorable meals and moments.
Today, Smucker is a leading marketer and manufacturer of consumer
food and beverage products and pet food and pet snacks in North
America. In consumer foods and beverages, its brands include
Smucker's®, Folgers®,
Jif®, Dunkin' Donuts®, Crisco®,
Pillsbury®, R.W. Knudsen Family®, Hungry
Jack®, Café Bustelo®, Martha White®, truRoots®,
Sahale Snacks®, Robin
Hood®, and Bick's®.
In pet food and pet snacks, its brands include Meow
Mix®, Milk-Bone®, Kibbles 'n
Bits®, Natural Balance®, and
9Lives®. The Company remains rooted in the
Basic Beliefs of Quality, People, Ethics, Growth, and
Independence established by its founder and namesake more
than a century ago. For more information about the Company,
visit jmsmucker.com.
The J. M. Smucker Company is the owner of all trademarks
referenced herein, except for the following, which are used under
license: Pillsbury® is a trademark of The
Pillsbury Company, LLC, and Dunkin' Donuts® is a
registered trademark of DD IP Holder, LLC.
Dunkin' Donuts® brand is licensed to The J. M.
Smucker Company for packaged coffee products sold in retail
channels such as grocery stores, mass merchandisers, club stores,
and drug stores. This information does not pertain to
Dunkin' Donuts® coffee or other products for sale
in Dunkin' Donuts® restaurants.
K-Cup® is a trademark of Keurig Green Mountain,
Inc., used with permission.
The J. M. Smucker Company
Unaudited Condensed
Consolidated Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
July 31,
|
|
|
|
|
|
|
|
|
% Increase
|
|
|
|
|
2016
|
|
2015
|
|
(Decrease)
|
|
|
|
|
(Dollars in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
1,815.8
|
|
$
1,952.0
|
|
(7%)
|
|
|
Cost of products
sold
|
1,093.1
|
|
1,223.3
|
|
(11%)
|
|
|
Gross
Profit
|
722.7
|
|
728.7
|
|
(1%)
|
|
|
|
Gross
margin
|
39.8%
|
|
37.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
distribution, and administrative expenses
|
356.0
|
|
387.6
|
|
(8%)
|
|
|
Amortization
|
51.7
|
|
53.0
|
|
(2%)
|
|
|
Other special project
costs
|
22.2
|
|
22.9
|
|
(3%)
|
|
|
Other operating
income - net
|
(1.0)
|
|
(1.9)
|
|
(47%)
|
|
|
Operating
Income
|
293.8
|
|
267.1
|
|
10%
|
|
|
|
Operating
margin
|
16.2%
|
|
13.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense -
net
|
(41.5)
|
|
(44.4)
|
|
(7%)
|
|
|
Other income -
net
|
1.1
|
|
0.1
|
|
n/m
|
|
|
Income Before
Income Taxes
|
253.4
|
|
222.8
|
|
14%
|
|
|
Income
taxes
|
83.4
|
|
86.4
|
|
(3%)
|
|
|
Net
Income
|
$
170.0
|
|
$
136.4
|
|
25%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share
|
$
1.46
|
|
$
1.14
|
|
28%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
common share –
|
|
|
|
|
|
|
|
|
assuming
dilution
|
$
1.46
|
|
$
1.14
|
|
28%
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
0.75
|
|
$
0.67
|
|
12%
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding
|
116,334,440
|
|
119,621,753
|
|
(3%)
|
|
|
Weighted-average
shares outstanding –
|
|
|
|
|
|
|
|
assuming
dilution
|
116,475,496
|
|
119,634,958
|
|
(3%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The J. M. Smucker
Company
Unaudited Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
July 31,
2016
|
|
April 30,
2016
|
|
|
|
(Dollars in
millions)
|
Assets
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
109.6
|
|
$
109.8
|
|
Trade receivables,
less allowance for doubtful accounts
|
523.0
|
|
450.1
|
|
Inventories
|
1,014.6
|
|
899.4
|
|
Other current
assets
|
93.5
|
|
114.1
|
|
|
Total Current
Assets
|
1,740.7
|
|
1,573.4
|
|
|
|
|
|
|
Property, Plant,
and Equipment - Net
|
1,598.5
|
|
1,627.7
|
|
|
|
|
|
|
Other Noncurrent
Assets:
|
|
|
|
|
Goodwill
|
6,084.6
|
|
6,091.1
|
|
Other intangible
assets - net
|
6,440.5
|
|
6,494.4
|
|
Other noncurrent
assets
|
197.5
|
|
197.5
|
|
|
Total Other
Noncurrent Assets
|
12,722.6
|
|
12,783.0
|
Total
Assets
|
$
16,061.8
|
|
$
15,984.1
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
$
452.0
|
|
$
459.4
|
|
Short-term
borrowings
|
306.0
|
|
284.0
|
|
Other current
liabilities
|
530.4
|
|
469.6
|
|
|
Total Current
Liabilities
|
1,288.4
|
|
1,213.0
|
|
|
|
|
|
|
Noncurrent
Liabilities:
|
|
|
|
|
Long-term
debt
|
5,045.7
|
|
5,146.0
|
|
Other noncurrent
liabilities
|
2,631.8
|
|
2,616.6
|
|
|
Total Noncurrent
Liabilities
|
7,677.5
|
|
7,762.6
|
|
|
|
|
|
|
Shareholders'
Equity
|
7,095.9
|
|
7,008.5
|
Total Liabilities
and Shareholders' Equity
|
$
16,061.8
|
|
$
15,984.1
|
|
|
|
|
|
|
|
|
|
|
|
|
The J. M. Smucker
Company
Unaudited Condensed
Consolidated Statements of Cash Flow
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
July 31,
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
|
Net income
|
$
170.0
|
|
$
136.4
|
|
|
Adjustments to
reconcile net income to net cash
|
|
|
|
|
|
provided by
operations:
|
|
|
|
|
|
|
Depreciation
|
54.0
|
|
55.7
|
|
|
|
Amortization
|
51.7
|
|
53.0
|
|
|
|
Share-based
compensation expense
|
8.1
|
|
7.7
|
|
|
|
Loss on disposal of
assets - net
|
0.5
|
|
1.3
|
|
|
|
Other noncash
adjustments
|
0.2
|
|
(3.5)
|
|
|
|
Defined benefit
pension contributions
|
(0.8)
|
|
(0.9)
|
|
|
|
Changes in assets and
liabilities, net of effect
|
|
|
|
|
|
|
from businesses
acquired:
|
|
|
|
|
|
|
|
Trade
receivables
|
(74.3)
|
|
(80.8)
|
|
|
|
|
Inventories
|
(117.3)
|
|
8.4
|
|
|
|
|
Accounts payable and
accrued items
|
52.9
|
|
(16.7)
|
|
|
|
|
Income and other
taxes
|
45.1
|
|
127.9
|
|
|
|
Other -
net
|
48.8
|
|
18.5
|
|
Net Cash Provided
by Operating Activities
|
238.9
|
|
307.0
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
Business acquired,
net of cash acquired
|
-
|
|
7.9
|
|
|
Additions to
property, plant, and equipment
|
(50.2)
|
|
(53.0)
|
|
|
Other -
net
|
(12.3)
|
|
7.0
|
|
Net Cash Used for
Investing Activities
|
(62.5)
|
|
(38.1)
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
Short-term borrowings
- net
|
22.0
|
|
76.6
|
|
|
Repayments of
long-term debt
|
(100.0)
|
|
(250.0)
|
|
|
Quarterly dividends
paid
|
(77.8)
|
|
(76.4)
|
|
|
Purchase of treasury
shares
|
(18.1)
|
|
(6.9)
|
|
|
Other -
net
|
0.7
|
|
0.5
|
|
Net Cash Used for
Financing Activities
|
(173.2)
|
|
(256.2)
|
|
Effect of exchange
rate changes on cash
|
(3.4)
|
|
(4.7)
|
|
Net (decrease)
increase in cash and cash equivalents
|
(0.2)
|
|
8.0
|
|
Cash and cash
equivalents at beginning of period
|
109.8
|
|
125.6
|
|
Cash and Cash
Equivalents at End of Period
|
$
109.6
|
|
$
133.6
|
|
|
|
|
|
|
|
|
|
The J. M. Smucker
Company
Unaudited
Supplemental Schedule
|
|
|
|
Three Months Ended
July 31,
|
|
|
|
|
|
% of
|
|
|
|
% of
|
|
|
|
2016
|
|
Net Sales
|
|
2015
|
|
Net Sales
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$1,815.8
|
|
|
|
$1,952.0
|
|
|
|
Selling,
distribution, and
|
|
|
|
|
|
|
|
|
administrative
expenses:
|
|
|
|
|
|
|
|
|
|
Marketing
|
108.7
|
|
6.0%
|
|
114.8
|
|
5.9%
|
|
|
Selling
|
65.0
|
|
3.6%
|
|
84.6
|
|
4.3%
|
|
|
Distribution
|
60.2
|
|
3.3%
|
|
61.7
|
|
3.2%
|
|
|
General and
administrative
|
122.1
|
|
6.7%
|
|
126.5
|
|
6.5%
|
|
Total selling,
distribution, and
|
|
|
|
|
|
|
|
|
administrative
expenses
|
$
356.0
|
|
19.6%
|
|
$
387.6
|
|
19.9%
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The J. M. Smucker
Company
Unaudited Reportable
Segments
|
|
|
|
|
|
|
|
|
Three Months Ended
July 31,
|
|
|
|
2016
|
|
2015
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
U.S. Retail
Coffee
|
$
513.3
|
|
$
565.0
|
|
|
U.S. Retail Consumer
Foods
|
537.0
|
|
582.2
|
|
|
U.S. Retail Pet
Foods
|
519.5
|
|
549.9
|
|
|
International and
Foodservice
|
246.0
|
|
254.9
|
|
Total net
sales
|
$
1,815.8
|
|
$
1,952.0
|
|
|
|
|
|
|
|
Segment
profit:
|
|
|
|
|
|
U.S. Retail
Coffee
|
$
173.8
|
|
$
173.8
|
|
|
U.S. Retail Consumer
Foods
|
111.4
|
|
119.4
|
|
|
U.S. Retail Pet
Foods
|
122.2
|
|
116.8
|
|
|
International and
Foodservice
|
39.5
|
|
36.1
|
|
Total segment
profit
|
$
446.9
|
|
$
446.1
|
|
|
Amortization
|
$
(51.7)
|
|
$
(53.0)
|
|
|
Interest expense -
net
|
(41.5)
|
|
(44.4)
|
|
|
Unallocated
derivative gains (losses)
|
7.7
|
|
(10.0)
|
|
|
Cost of products sold
- special project costs
|
(4.0)
|
|
(3.1)
|
|
|
Other special project
costs
|
(22.2)
|
|
(22.9)
|
|
|
Corporate
administrative expenses
|
(82.9)
|
|
(90.0)
|
|
|
Other income -
net
|
1.1
|
|
0.1
|
|
Income before income
taxes
|
$
253.4
|
|
$
222.8
|
|
|
|
|
|
|
|
Segment profit
margin:
|
|
|
|
|
|
U.S. Retail
Coffee
|
33.9%
|
|
30.8%
|
|
|
U.S. Retail Consumer
Foods
|
20.7%
|
|
20.5%
|
|
|
U.S. Retail Pet
Foods
|
23.5%
|
|
21.2%
|
|
|
International and
Foodservice
|
16.1%
|
|
14.2%
|
|
Non-GAAP Measures
The Company uses non-GAAP financial measures including: net
sales excluding the noncomparable impact of the divestiture and
foreign currency exchange; adjusted gross profit, operating income,
income, and earnings per share; earnings before interest, taxes,
depreciation, and amortization ("EBITDA"); and free cash flow, as
key measures for purposes of evaluating performance
internally. The Company believes that these measures provide
useful information to investors because they are the measures used
to evaluate performance on a comparable year-over-year basis.
Non-GAAP profit measures exclude certain items affecting
comparability which include merger and integration and
restructuring costs ("special project costs") and unallocated gains
and losses on commodity and foreign currency exchange derivatives
("unallocated derivative gains and losses"). The special
project costs relate to specific merger and integration and
restructuring projects and unallocated derivative gains and losses
reflect the changes in fair value of the Company's commodity and
foreign currency exchange contracts. Beginning May 1, 2016, the Company redefined the non-GAAP
measures to also exclude amortization expense related to intangible
assets, including any related impairment charges ("amortization"),
and has modified prior year results to conform to the new
definition. The Company believes that excluding amortization
in its non-GAAP measures is more reflective of the Company's
operating performance and the way in which the Company manages its
business, as amortization is a non-cash expense and can be
significantly affected by the timing and size of
acquisitions. These non-GAAP financial measures are not
intended to replace the presentation of financial results in
accordance with U.S. generally accepted accounting principles
("GAAP"). Rather, the presentation of these non-GAAP
financial measures supplements other metrics used by management to
internally evaluate its businesses, and facilitates the comparison
of past and present operations and liquidity. These non-GAAP
financial measures may not be comparable to similar measures used
by other companies and may exclude certain nondiscretionary
expenses and cash payments. A reconciliation of certain
non-GAAP financial measures to the comparable GAAP financial
measure for the current and prior year periods is included in the
"Unaudited Non-GAAP Financial Measures" tables. The Company
has also provided a reconciliation of non-GAAP financial measures
for its fiscal 2017 outlook. As the amount of unallocated
derivative gains and losses varies depending on market conditions
and levels of derivative transactions with respect to a particular
fiscal year, it is not determinable on a forward-looking basis and
no guidance has been provided.
The J. M. Smucker
Company
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
Three Months Ended
July 31,
|
|
|
|
|
|
|
|
|
Increase
|
|
|
|
|
|
|
2016
|
|
2015
|
|
(Decrease)
|
|
%
|
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
reconciliation:
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
1,815.8
|
|
$
1,952.0
|
|
$
(136.2)
|
|
(7%)
|
|
|
|
Milk
divestiture
|
-
|
|
(39.5)
|
|
39.5
|
|
2%
|
|
|
Net sales excluding
divestiture
|
$
1,815.8
|
|
$
1,912.5
|
|
$
(96.7)
|
|
(5%)
|
|
|
|
Foreign currency
exchange
|
4.6
|
|
-
|
|
4.6
|
|
-
|
|
|
Net sales excluding
divestiture and
|
|
|
|
|
|
|
|
|
|
foreign currency
exchange
|
$
1,820.4
|
|
$
1,912.5
|
|
$
(92.1)
|
|
(5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts may not add
due to rounding.
|
|
|
|
|
|
|
|
Net sales excluding
divestiture has been adjusted for the noncomparable impact of the
U.S. canned milk business divested on December 31, 2015.
|
The J. M. Smucker
Company
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
Three Months Ended
July 31,
|
|
|
|
2016
|
|
2015
|
|
|
(Dollars in millions,
except per share data)
|
|
|
|
|
|
|
Gross profit
reconciliation:
|
|
|
|
|
Gross
profit
|
$
722.7
|
|
$
728.7
|
|
Unallocated
derivative (gains) losses
|
(7.7)
|
|
10.0
|
|
Cost of products sold
- special project costs
|
4.0
|
|
3.1
|
|
Adjusted gross
profit
|
$
719.0
|
|
$
741.8
|
|
|
% of net
sales
|
39.6%
|
|
38.0%
|
|
|
|
|
|
|
Operating income
reconciliation:
|
|
|
|
|
Operating
income
|
$
293.8
|
|
$
267.1
|
|
Amortization
|
51.7
|
|
53.0
|
|
Unallocated
derivative (gains) losses
|
(7.7)
|
|
10.0
|
|
Cost of products sold
- special project costs
|
4.0
|
|
3.1
|
|
Other special project
costs
|
22.2
|
|
22.9
|
|
Adjusted operating
income
|
$
364.0
|
|
$
356.1
|
|
|
% of net
sales
|
20.0%
|
|
18.2%
|
|
|
|
|
|
|
Net income
reconciliation:
|
|
|
|
|
Net income
|
$
170.0
|
|
$
136.4
|
|
Income
taxes
|
83.4
|
|
86.4
|
|
Amortization
|
51.7
|
|
53.0
|
|
Unallocated
derivative (gains) losses
|
(7.7)
|
|
10.0
|
|
Cost of products sold
- special project costs
|
4.0
|
|
3.1
|
|
Other special project
costs
|
22.2
|
|
22.9
|
|
Adjusted income
before income taxes
|
$
323.6
|
|
$
311.8
|
|
Income taxes, as
adjusted
|
106.4
|
|
120.9
|
|
Adjusted
income
|
$
217.2
|
|
$
190.9
|
|
|
|
|
|
|
Weighted-average
common shares outstanding
|
115,805,073
|
|
119,089,757
|
Weighted-average
participating shares outstanding
|
529,367
|
|
531,996
|
Total
weighted-average shares outstanding
|
116,334,440
|
|
119,621,753
|
Dilutive effect of
stock options
|
141,056
|
|
13,205
|
Total
weighted-average shares outstanding - assuming dilution
|
116,475,496
|
|
119,634,958
|
|
|
|
|
|
|
Adjusted earnings per
share
|
$
1.86
|
|
$
1.60
|
|
|
|
|
|
|
|
|
|
|
|
|
The J. M. Smucker
Company
Unaudited Non-GAAP
Financial Measures
|
|
|
|
|
Three Months Ended
July 31,
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
EBITDA
reconciliation:
|
|
|
|
|
|
Net income
|
$
170.0
|
|
$
136.4
|
|
|
Income
taxes
|
83.4
|
|
86.4
|
|
|
Interest expense -
net
|
41.5
|
|
44.4
|
|
|
Depreciation
|
54.0
|
|
55.7
|
|
|
Amortization
|
51.7
|
|
53.0
|
|
|
Earnings before
interest, taxes, depreciation, and amortization
|
$
400.6
|
|
$
375.9
|
|
|
|
% of net
sales
|
22.1%
|
|
19.3%
|
|
|
|
|
|
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
238.9
|
|
$
307.0
|
|
|
Additions to
property, plant, and equipment
|
(50.2)
|
|
(53.0)
|
|
|
Free cash
flow
|
$
188.7
|
|
$
254.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables provide a reconciliation of the Company's
fiscal 2017 guidance for estimated adjusted earnings per share and
free cash flow.
|
|
|
Year Ending April 30,
2017
|
|
|
|
Low
|
|
High
|
|
|
|
|
|
|
Net income per common
share - assuming dilution reconciliation:
|
|
|
|
|
Net income per common
share - assuming dilution
|
$
5.85
|
|
$
6.00
|
|
Special project
costs
|
0.57
|
|
0.57
|
|
Amortization
|
1.18
|
|
1.18
|
|
Adjusted earnings per
share
|
$
7.60
|
|
$
7.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ending April 30,
2017
|
|
|
|
|
|
(Dollars in
millions)
|
|
|
Free cash flow
reconciliation:
|
|
|
|
|
Net cash provided by
operating activities
|
$
1,240
|
|
|
|
Additions to
property, plant, and equipment
|
(240)
|
|
|
|
Free cash
flow
|
$
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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SOURCE The J.M. Smucker Company